Which of the Following Statements Is Not Correct

question 1

Multiple Choice

Which of the following statements is not correct?

• A) The gross profit percentage is calculated by dividing the gross profit for the year by the net sales for the year.
• B) The average inventory is calculated by adding the beginning inventory to the ending inventory and dividing the sum by 2.
• C) A current ratio of 3.5 to 1 means that a firm has $3.50 in current liabilities for every $1 of current assets.
• D) Working capital is the difference between total current assets and total current liabilities.

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Definitions:

Currency

The system of money in general use in a specific country, consisting of banknotes and coins, that is accepted as a medium of exchange.

Overdraft Privileges

A feature offered by banks allowing an account holder to withdraw more money than is currently available in their account, often for a fee.

Fee

A charge for services rendered or for access or admission to facilities or events.

Banks

Banks are financial institutions licensed to receive deposits and provide loans, along with offering various other financial services.